Do you need these types of insurance as your get older? Some kinds of insurance policies don’t make sense financially in your upper years. AARP’s recent article entitled “10 Types of Insurance You Don’t Need” lists some insurance products that may not make sense for seniors.
- Life insurance after you retire. This is designed to protect your family from losing income if something happens to you. The need for it depends on your age and financial situation. It may be a good option if you have debt and your spouse and others rely on you. However, it's not if you have little or no debt and your retirement assets are substantial.
- Final expense coverage. If you have little debt and substantial assets, it’s not needed. However, if you’re still building those assets and want to spare loved ones the burden of covering your outstanding debts, end-of-life medical costs and funeral expenses should you pass away suddenly, it might be worth it.
- Cancer and other disease insurance. Good health insurance is essential. However, your health issues may not be cancer or may not require hospitalization. This type of insurance is a waste of money compared to better health insurance.
- Life insurance for kids or grandkids. Your children are not sources of income, so why do you need to insure them? Life insurance for children is most frequently sold as term insurance, which has no cash value.
- Disability insurance as you age. Many people carry this type of insurance longer than they should because it only pays until you reach age 65. As a result, the number of years you could collect from it after a disabling injury or illness decreases over time.
- Mortgage life insurance. These policies are narrow in scope, and your family will get no additional financial benefit, as they would with a life insurance policy (which also may be less expensive). The older you get and the more you pay down your mortgage, the less you need this type of coverage.
- GAP insurance. Guaranteed asset protection (GAP) insurance pays the difference between the amount allowed for the total loss of your new or used car and the balance on your loan or lease. This may make sense if you put less than 20% down and chose to pay it off over a long period — like, five years. However, carry it only when the loan balance is more than the car's value.
- Cell phone insurance. Just stick with the manufacturer’s warranty covering defects or malfunctions because technology becomes obsolete quickly.
- Dent insurance. This covers repairs of the dents and dings that can happen. However, you’ll still have to pay your deductible. So, it’s probably not worth it.
- Rental-car insurance. If your car insurance covers you for car rentals, then decline the policy that the rental-car company offers.
These are so many types of insurance to consider, but finding what works best for your families needs is key. Our practice has relationships with many insurance agencies and can even guide you in the selection process. Book a call with Vick Law, P.C. to discuss your estate plan and which insurance may best fit your needs.
Reference: AARP (Nov. 22, 2023) “10 Types of Insurance You Don’t Need”